Should the government borrow?

11/04/2009

Should the government borrow:

* to enable middle and upper income families to buy luxuries?

* to buy and maintain high country farms?

* to fund the Families Commission?

* to support a bloated public service?

The survey  commisioned by the Business for Sustainable Development didn’t ask those questions, it just asked if the government should borrow to fund tax cuts.

But if the previous government wasted so much money on these and other money wasting projects the current one wouldn’t have to borrow to fund them now.

Had the previous government  not overtaxed and overspent we’d have had tax cuts long before now.

If it had spent more on policies which promoted economic growth instead of those which stifled it we’d be in a much better position to meet and recover from the recession.

But it did which leaves this government to clean up the mess and get the economy growing again.

Because the previous administration spent the lot, this one has to borrow. That’s not bad in itself as Adolf at No Minister points out:

. . . just so long as the borrowing is funding capital expenditure and only sufficient tax is taken to fund operating costs and service the debt over the lifetime of the asset.

That’s what prudent people and businesses do and it’s not imprudent for governments to do it too.


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